Can Cryptocurrencies be included in Business Transactions?
How pragmatic is the approach?
Disclaimer : It is not a Financial advise. Like any investment option it has its inherent risk.
Cryptocurrency has been scrutinized at miscellaneous occasions and its viability has been questioned for its volatility. Nevertheless on economics perspective it is inevitable to ignore its significance because of its rising demand by both corporate and retail investors. It is important to understand that cryptocurrency will be a future derivative and its valuation is worth only if it can be used as a means of business and everyday transactions.
What exactly is Bitcoin or Cryptocurrency?
The concept of cryptocurrency includes a virtual decentralized currency built on block chain technology. It is primarily favored for its 3 ideal features: (1) decentralized system (2) impossible to counterfeit (3) immunity to inflation.
Even Elon Musk considers the potential of Bitcoin and has recently invested over $1.5 billion dollars in cryptocurrency. He had already favored the choice of bitcoin as an alternate payment option for purchasing Tesla.
The network of businesses are expanding beyond domestic borders and every industry is now looking for an untapped market.
Cryptocurrency is going to be the future of global business transactions.
Crypto currency might be the future for dominating the day-to-day transactions in businesses. Being a digital currency it offers flexibility for transactions across a global platform. It offers several benefits including immunity against currency fluctuations, the speed at which transactions are taking place and even security.
Cryptocurrency can be the next PayPal or even better?
We all know how PayPal revolutionized business payments. Digital exchange has always been favored for consumer convenience. It becomes a significant factor when you are entering a global market where currency depreciation is an important factor for market penetration.
Cryptocurrency can be traded in fractions and serves as a global digital currency exchange. Also the hefty bank -to-bank processing fees is more likely to put a dent on your profit. Being a decentralized non-government regulated virtual currency platform, cryptocurrency can easily help businesses to save a fortune by avoiding such costs.
Customer satisfaction is an inevitable ordinance. The reason why PayPal took off where there was other similar payment systems, is simply because its cost of transaction was lower than its competitor at the time. Now imagine a platform with no such associated cost and a standard currency of exchange: cryptocurrency can undoubtedly take over PayPal. Also the transaction time for cryptocurrencies is in real-time compared to PayPal requiring 3–5 business days.
Global Enterprises are already planning on issuing their own cryptocurrency and it is more likely to succeed in customer acquisition due to its mind games.
Walmart, the famous chain store has already applied for a patent on its cryptocurrency. It is planning on using it as a replacement for credit/debit cards used by its customers to pay for their purchases. Amazon, is also following on this footstep by registering for cryptocurrency related domain. Heard about Amazon coins? It allows you to make purchases on Android apps, games and similar such items from its app store.
In spite of all the positive attributes, the integration of cryptocurrency into your business will initially face many challenges.
The concept of cryptocurrency is still very vague among the general population. You can read more about technical aspects about cryptocurrency at Cryptocurrency where I explained the concept in layman terms. Warren Buffett is shy of investing in cryptocurrency because he is skeptic about this technology and does not understand how it works. “You have to learn how to value businesses and the ones that are within your circle of competence and the ones that are outside ”. : Warren Buffet.
Just a complete integration of cryptocurrency into your payment method can drive off potential customers. A hybrid platform where both traditional monetary exchange and cryptocurrency can exist simultaneously will attract a range of potential customers.
The high volatility of Bitcoin value can be another disappointing factor for exchange. In the mid-March 2020 it was trading at approximately $6000= 1 bitcoin which jumped to around $12000 in late July, 2020 and it is currently trading at $47000 ( at the time of writing this article). This high volatility might not be ideal when making purchases. Hence a standard cryptocurrency valuation is required for commercial purchase transaction purposes. However it is a good investment option at times but you need to realize its inherent risk.
Nevertheless, the future of cryptocurrency seems strong as we proceed towards globalization and digitization.The widespread adoption might take several years but the trend is already emerging as many big enterprises have started to exploit the potential of cryptocurrencies.
